“Interest in silver was surprising in a context of a 12% price fall in December,” BNP precious metals strategist Anne-Laure Tremblay told clients. The metal registered that double-digit decline in London trading. Silver prices SIH
/quotes/zigman/8702780SIH3 fell 9.1% in December on the Comex division of the New York Mercantile Exchange.

“Given silver’s property as a geared play on gold, the metal could potentially see a bigger decline in the very short term, like that seen in non-commercial futures positions,” said BNP.

Meanwhile, flows into gold ETFs were “largely flat” in December. Inflows were up 0.4% to reach 10.3 metric tons, of which 6.9 metric tons were from smaller ETFs. A contribution of two metric tons came from the SPDR Gold Shares
/quotes/zigman/41663/quotes/nls/gldGLD, the largest gold ETF. Gold prices also fell last month.

“Lately, sentiment on gold has turned more negative and we may not see a rebound in interest just yet,” Tremblay wrote. However, BNP held to a positive outlook for prices of gold and silver in the coming months, “and as a result, we expect investor interest in these metals to rebound.”

BNP also said inflows into gold ETFs in 2012 rose 12% from the year-ago period, to 287.2 metric tons. Silver ETFs registered an 8.4% rise in inflows last year to 1482.2 metric tons.

Separately, ETF Securities said investment in commodity exchange-traded products, or ETPs, worldwide increased $29 billion in 2012 to year-end record high of $199.8 billion. Gold ETPs had the largest increase, with assets rising $24 billion to log an all-time high of $146.6 billion. ETPs include exchange-traded funds, notes and other vehicles.

The rise in commodity ETP assets last year stemmed largely from strong investor demand for gold and silver ETPs “to hedge against currency debasement as the world’s major central banks made clear their intention to extend current asset purchase programs,” said Nicholas Brooks, head of research and investment strategy at ETF Securities, in a statement.

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